Interviews, insight & analysis on digital media & marketing

Reaction to the latest IPA Bellwether report (part two)

The industry has been reacting to the findings of the latest IPA Bellwether report, which reveal that marketing budget growth slowed considerably during Q3 2022.

Lauren Tiley, VP of Client Development at Permutive, commented: “It’s encouraging to see marketing budgets are still on an upward trajectory against the challenging economic backdrop. However, as consumers increasingly opt-out of their data being collected and used for hyper-targeting and tracking by third parties, resulting in just 30% of the open web being addressable, brands wanting to reach their audiences must stop working against consumer choice and start investing responsibly.

“This means scaling their data by working directly with publishers’ first-party, non-personally identifiable, consented data. In this way, brands can reach audiences across all environments without identifying individuals and compromising their privacy, while ensuring media investment is working harder during a time of recession.”

Heather Lloyd, Head of Product Marketing, Nano Interactive said: “We shouldn’t be surprised that the Q3 2022 Bellwether points to a slowdown, given the wider economic uncertainty across the country. However, some argue this volatility might bring positives as well as negatives in some quarters. Since digital in particular favours agility and almost real-time flexibility, it’s likely to benefit versus other channels. In fact, the report may even suggest this is already occurring: comparing clients’ Q3 and Q2 spend, ‘other online’ came out top of the list, with a +9.3% net balance. Even the ‘video’ category, covering TV, as well as online video and cinema, couldn’t match this number.

“Even if, as the report suggests, the UK’s recession is a short-lived one, it seems obvious brands and agencies will look to do more with less. Tactics and solutions that are able to run independently, and which don’t incur risk further down the line may profit. And as the cookie keeps crumbling, ID-free and contextual targeting seem only more relevant in time.”

Paul Coggins, CEO and Co-Founder at Adludio, commented: “Although remarkably resilient in the face of such serious economic adversity, the results from this quarter’s IPA Bellwether report indicate that marketing budgets are clearly being squeezed. To what extent will depend on the severity and depth of next year’s likely recession.” 

“All eyes must be on 2023, and Marketing Directors at premium brands need to hold the line, maintain and, if possible, accelerate their branding activity – the interest amongst marketers within the report,, in boosting brand visibility through digital channels, suggests that they are doing this already.

Coggins continued: “Indeed, performance marketing spend achieves the best results when you have consumers placed into the top end of the marketing funnel, through creative-led branding activity. There are technologies which can help here, ensuring this creative is deterministically-directed and results-driven.

“For example, solutions which utilise historical creative data and AI-led insights can deliver immersive campaigns which entice users, and are shown to enhance engagement levels at the top of the funnel dramatically. These brand experiences will be the ones that are remembered once the hard times are past.”

Reasons to be cheerful?

Hunain Khan, Director – Programmatic CTV supply, Xandr, noted that despite the ongoing economic downturn, the IPA report shows an +8.7% uplift in investment in digital video, which is an increase from Q2’s IPA report. 

Khan said: “CTV is an area of digital video that marketers should pay close attention to. With economic uncertainty a reality for UK consumers, households who have multiple subscriptions might be looking to consolidate their TV viewing into one provider or to move their subscription into the AVOD format. In this scenario, free-to-view AVOD services are a good place to pick up new viewers, and so these publishers have an opportunity to establish themselves as effective media partners for brand advertisers.

“Investing in channels like CTV allows marketers to target specific segmented audiences, allowing brands to maximise their ad spend at a time when it matters most.”

Paul Lowrey, Director of Strategy, Insights and Marketing at Azerion, commented: “Whilst there are some positives from the Q3 IPA Bellwether report, there’s no doubt that the impact of the cost-of-living crisis will be felt harder into Q4 and early 2023. 

“Audience behaviour and consumer spending is changing rapidly so if brands are to respond and maximise their marketing performance with ongoing budget cuts, a greater focus on securing ‘value’ beyond the transactional media investment will help.

“As such, our concept of value needs to move beyond ‘price’ to greater recognition of how media partners can help advertisers understand audiences all the way through to how we creatively engage with them. Increased collaboration of expertise and knowledge alongside the transactional product investment will be crucial to delivering the brand performance all advertisers need.”

Vihan Sharma, Executive Vice President Global Sales and MD of Europe, LiveRamp said: “When facing a precarious economic quarter, pulling back on media spend may seem an enticing tactic in the short-term, but it holds back recovery. For example, case studies have shown that brands which maintained marketing budgets through the pandemic were often the ones which rebounded the quickest. So, the fact that 22.2% of companies surveyed for IPA’s Bellwether report had increased their total marketing budgets for Q3 is encouraging, suggesting this lesson has been learned in part. 

“Marketers should get creative with their investments this quarter, using this time effectively to interrogate their current media strategies and work closely with their partners to locate cost efficiencies. This includes basing budget allocation on achieving real business outcomes, in addressable, accountable and measurable results. Indeed, with the resilient growth of digital marketing budgets reported for Q3, it is imperative that addressable data is being activated across all these channels. Particularly on those which are developing rapidly, like mobile, search,  Connected TV and cloud.

“Marketers who successfully implement ‘people-based’ measurement solutions here, which leverage privacy-compliant, first-party data, and which provide insight across all omnichannel marketing activities, will be best able to stay connected with their high value audience segments. At a time when consumers are looking for more thoughtful experiences from brands, this opens up significant opportunities to strengthen customer loyalty, and increase market share.”

Innovation and growth

Matt Nash, UK Managing Director, Scibids, said: “While 2023 will likely be another challenging year, we can still expect smart companies that offer innovative products and services that deliver real value to grow. Indeed, as we saw during the pandemic, brands and agencies will be looking to partners who can help them become more efficient, by helping under pressure teams cope and thrive, as well as be effective. In turn this will ensure they are delivering outcomes that are truly aligned with business needs.

“To achieve this, it means understanding what drives results and, in particular, how brands can view the correlation between media and sales performance with greater precision. And by doing so, this will improve efficiency and best prepare businesses to grow, even through a likely recession.“ 

Mateusz Jędrocha, Head of Upper Funnel Solutions Development at RTB House, said:

“The financial outlook might be bleak but its impact on the marketing industry isn’t yet a major cause for concern. Budgets are still up, albeit minimally, and only a fifth of brands cut spend in Q3. Importantly, investment in online and digital video advertising is up, perhaps unsurprisingly, as these channels offer the greatest measurability and opportunity to engage consumers. 

“There’s no avoiding the fact that consumers are cautious about spending though. For brands this means serving users relevant ads when they are open to them, has never been so important. To reach the right individuals on the right channel with truly personalised ads, brands need to invest in technology that understands exactly which product a user is most likely to be interested in and when. And in the lead up to Christmas, when consumers might spend considerably more time browsing before making a purchase, brands need to integrate tech that effectively personalises retargeting, without it becoming irritating to shoppers.  

“Deep Learning offers a solution. The best-in-class technology can hyper-target and tailor ads on the open internet, without the need for cookies. This tech goes far beyond what is possible with human hands to significantly maximise the value of each ad impression and bring optimism back to marketers during the crucial Q4 period.”

Harry Williams, Senior Marketing Manager at A Million Ads, comments: “While it’s disheartening to see that main media marketing budgets – which includes radio, have fallen for the first time since Q1 2021, this decrease was only mild overall, indicative of a cautious reduction amid rising risks to the UK economy.

“Understandably, brands will now be wanting to work with partners who can build brand awareness whilst driving clear ROI and getting the most bang for their buck. And this is where digital audio can take centre stage by utilising techniques such as addressable advertising, thus bridging the gap between data and creativity. 

“In fact, as one of the fastest growing advertising mediums, digital audio is consistently innovating to ensure new trends are accommodated. For example, it’s now possible to create ads that do not simply just target consumers with products and services but are actively using data available to make the consumer’s decisions easier. And this is why I predict 2023 will be a bumper year for the channel.”

David McLean, Managing Director, News Live – News UK Events, commented: “It’s heartening to see that events remain a key avenue of marketing growth, with one respondent citing that businesses will need to increase their profile, with a sharp increase in the need to network and build contacts. This echoes our own experience as we’ve seen investment move towards face-to-face opportunities and projects as businesses want to re-engage audiences. That said, there’s still a market for virtual events but the quality and experience have to stand out.  

“With a growing demand post-pandemic for new formats and types of live experience, we believe that excitement and demand for events is stronger than it’s ever been before. In particular, we’ve seen B2B events growing exponentially and due to the current political climate, advertisers are looking to deliver more innovative and relevant events that showcase what is currently happening in the world today. 

“To succeed in the year ahead, advertisers and their partners should ensure they are collecting data effectively to gain insight into what success looks like.”

Rob Smith, Growth Director, Incubeta, said: “While the overall viewpoint of the Q3 2022 IPA Bellwether report is largely negative, there are some encouraging takeaways. The report highlights that the digitalisation of financial services could be a potential opportunity for marketers and fintech brands to engage more customers and promote their products.

“For finance companies looking to promote robust financial planning, now is the time to invest in brand visbility with around two-thirds of UK residents stating raising prices as their top concern this winter. To achieve this, it’s important for brands to instil confidence in their consumers. This is done via the promotion of reliable and effective products, a privacy-first approach to data collection, and upholding a customer-first strategy to consumers at the heart of the business.”